Why is で used instead of に alongside ある？

Question

I am wondering as to why で was used after 間 instead of に as I would expect because it is talking about popularity being present. What is the general definition for this usage of で？

そのホテルは安くて清潔なので、旅行者たちの間で人気がある。

Answer 1

そのホテルは安くて清潔なので、旅行者たちの間で人気がある。

The sentence sounds perfectly natural with で.

旅行者たちの間 is not the place 人気 exists. Actually, 人気 is present in そのホテル. Compare:

• その歌手は人気がある。
  lit. As for the singer, there's popularity. / The singer has popularity. → The singer is popular.
• その選手は見込みがある。
  lit. As for the player, there's prospect. / The player has prospect. → The player is promising.
• 彼は人望がある。
  lit. As for him, there's popularity/trust. / He has popularity/trust. → He is popular/trusted.
• 彼は才能がある。
  lit. As for him, there's talent. / He has talent. → He is talented.

You can say:

その歌手はフランスで人気がある。 The singer is popular in France.

but not その歌手はフランスに人気がある。Here, フランス is the place where the phenomenon その歌手は人気がある is occurring, not the place where 人気 exists / is present. So you use フランスで, not フランスに here.

Your example そのホテルは...旅行者たちの間で人気がある literally means "As for the hotel, there's popularity among tourists." → "The hotel is popular among tourists." You use で not に here, since 旅行者たちの間 is not the place where 人気 exists, but expresses among what kind of people, or in what group of people, the phenomenon そのホテルは人気がある is occurring.

_{In そのホテルは旅行者たちに人気がある, you use に. The に means "with", as in "The hotel is popular with tourists", indicating 対象/target.}

Answer 2

I am wondering as to why で was used after 間 instead if に as I would expect because it is talking about popularity being present. What is the general definition for this usage of で？

そのホテルは安くて清潔なので、旅行者たちの間で人気がある

I think we native speakers are also confused about things like this because we are using them without knowing the grammar, but I feel the same way as you do. I feel it will sound better if it's
そのホテルは安くて清潔なので、旅行者たちに人気がある。
そのホテルは安くて清潔なので、旅行者たちの間に人気がある。
そのホテルは安くて清潔なので、旅行者たちの間で もてはやされている。
そのホテルは安くて清潔なので、旅行者たちの間で人気が出ている。

[場所]で is to say a location of a happening; どこそこで行う. （花火大会｛はなびたいかい｝が広場｛ひろば｝である means a happening.）
[場所]に is to say a location of an existence; どこそこにある.