"Happy Holidays" was invented to "replace" "Merry Christmas" because some believe it's considered offensive to be partial to the Christmas celebration, and then omit Hanukkah, Kwanzaa, New Year's, even Thanksgiving. In order not to offend someone who doesn't celebrate Christmas or want to recognize the Christianized part of the holiday, you just include them all with "Happy Holidays".
The real big question is, who's offended? The answer is strictly only those people who think others are offended (or very minor extremist groups). The [neutral-as-possible] people who make the accusations that it might be offensive are the only parties involved.
It might be just because of where I live, but saying "Merry Christmas" around the DFW area makes things bright, even excited. Christmas has some roots in Christianity, but it's a world-wide celebrated holiday, from the Middle East to Japan, across the Americas and Europe.