How many will the holiday rental sleep? That will influence furnishings and configuration.

TV on the wall that backs up to the kitchen. The wall I am looking at on the right side of the pic, can hold the dining set. Look for one that will fit in that area. How many people do you need to seat for dinner?
Can't see the whole kitchen in the pic. Is there room for a small bench and table in a corner for a simple dinner?

Sectional in corner by window. Float a club chair by closet door. Use square ottoman as coffee table. A round 4 top by window on kitchen wall. Keep colors in neutrals. If by water do the place in white and denim blue

Here is another option similar to previous comments.

Can you remove the partial walls and doors around stairs and to kitchen. One large space with open stairs will look so much larger. Regardless, dining table along right side wall with fabric parson chairs that can be pulled to living area. Center armoire w/tv on wall that backs to kitchen this also provides more storage. Flank, armoire with 2 chairs angled to the room. Sectional sofa on left wall that angles out in front of door. One section could be a sleeper to offer more sleeping accommodations Small chest w/large mirror over it immediate left of front door to create foyer area. Always choose fabrics (sofa/chairs) before you choose a paint color and always paint the ceiling. There are a million paint colors and only a few fabrics you will like. Good luck.

Thank you. Never of thought of that .sound good .have a great new year love joy

I think the wall backing to the kitchen is the right place for dining, but I would do a rectangular table instead of a round - it looks like you have enough space there to keep the dining area form impinging on the living room rectangle.... I would consider upholstered banquette style seating against the wall (saving you the space needed for chair pull back) and either chairs or a loaf ottoman on casters, which could be rolled into the living room for extra seating for the other side of the table. I'd love to see you use the whole of the larger rectangular space to set up your living room rather than shove all the funiture into one corner