From Bulbapedia, the community-driven Pokémon encyclopedia.
The Princess Festival (Japanese: ひなまつり Doll Festival) is a holiday celebrated annually throughout the Pokémon world on March 3 (the date is not stated in the dub). It is the equivalent of the real-world Japanese holiday Hinamatsuri (literally translates to Doll Festival, but sometimes referred to as Girls' Day), which is held annually on March 3.
Like in the real world, it is traditional for girls to display a set of ornamental dolls representing the Emperor's Court. It is commemorated by various events, girls' only Pokémon tournaments, and other activities and sales, which are for girls only. During the Princess Festival, there are drastic discounts at stores for women only.
The Princess Festival was shown in the anime episode Princess vs. Princess. Misty and Jessie reminisced about past Princess Festivals, while competing for a prized Pokémon doll collection.
Queen of the Princess Festival contest
The Pokémon Princess Doll Set, the contest's prize
The Queen of the Princess Festival contest (Japanese: クイーンコンテスト Queen Contest) is a competition held in O-Hina Town consisting of Pokémon battles. Each Trainer must use exactly four Pokémon to battle. The battles are split into two separate divisions, and the winner of each division proceeds to the finals. Each Trainer entering the contest is required to be female. Every competitor wears a formal traditional Japanese outfit, with a Kimono and usually a fan. Before the actual competition, the contestants all stand in a row on stage as people gather to watch. The only confirmed winner of the contest is Misty.
The prize for winning the contest is a brand new set of Pokémon Princess Dolls, and a photo with famous actor Fiorella Cappuccino, who was also an announcer of the contest.