The concept of mandating a period of when leave can be taken is no unusual in general, there are many industries that have similar mandates, especially the education sector. In many cases it is practical to entirely shut down rather than attempt to operate at a reduced load. This can benefit both staff and the employer, staff benefit from not having to compensate workloads (this can significantly increase workplace stress) as well as the employer being able to predict, plan for and budget around this closure.
Many construction and manufacturing industries also follow this pattern, if suppliers are shutting down, then it is too risky to continue cinstruction/manufacture during this time frame as you may run out of supplies.
I wouldn't consider it a Red Flag, it is up to you to decide if the employer has offered enough remuneration to make this worth your while, for instance many industries where this practice is normal will offer more holidays. Again the education sector often gets a few additional weeks off, but the trade off is that all of them are in the peak periods.
The reverse scenario can be more painful, IT firms who service industries that traditionally shut down may experience higher work demand during these periods, as this is the optimal time to rollout mainframe or mass workstation or software upgrades when there are no bums on seats to get in our way. In this scenario you may be informed that you cannot take the time off over the Christmas/new year break, or you might to required to work every second year during this period.
The bottom line is that in this case the employer is being up-front about this, so ask what to procedure is when you want to take a mid-year break and what policies they have in place around accruing leave over multiple years, can you for instance take additional days this year in-lieu of some days next year.
Even though you are forced to use some of your leave, you should still be able to arrange enough time off in the non-peak seasons on the occasions that you want to, it just takes some negotiation and planning to get the approval.
Many destinations and services are busier and/or more expensive during the holidays, reducing the value of that time off
It is true that it is less economical to vacation abroad (or even domestically) during the traditional holiday seasons, but it is still more common for people to do so during this time for many other practical reasons, like the fact that schools and many offices are closed. This is why it is more expensive, the demand is higher. So statistically more staff in general would prefer to take that time period off, it is usually an easy sell from the employer's point of view.
Remember that the recruitment process works both ways, they are selecting you, but you are also selecting them, it is up to you to decide if the terms that they set work for your personal situation. If they do not, then be looking for a higher salary then you would otherwise be willing to accept.
Your base salary expectation + X weeks to cover worst case scenario that you have to take the time off without pay ;) multiply X a bit until it IS worth your while
$expected x (X weeks + 52)/52 = $ask