If you feel the need, replace the strap. Use the correct weight leather and sew in the same fashion as was originally done using the correct natural thread. You may feel you can do it, but if you are in the least bit uncertain, have someone experienced do it.
The best thing to do for an historical item made of leather is nothing. Keep it out of direct sunlight, store it in an environment with stable humidity and temperature, and handle it as little as possible. That is what historical preservationists do. However, you are not at that level and the item you are working on is not rare.... yet. So, as far as what to use to restore the oils the holster naturally had when new, use pure neatsfoot oil or lanolin, they will do the job. Clean the leather first and then apply a light coat of oil, no more, it doesn't need it. Keep in mind that the oil will darken the leather somewhat but not too much. Do not use any of the modern goops said to be used by museums to preserve their collections, as I said above, museums with qualified preservationists do not use anything, they store the items properly to stop the deterioration the best they can, that is all.
Something else to keep in mind, as far as getting a Luger for the holster be sure that there is no oil whatsoever on the Luger if you intend to put it in the holster. The worst thing for leather - even worse than being displayed in direct sunlight - is petroleum. Keep your properly oiled Luger away from the holster unless you wipe it completely dry before putting it in the holster.