This is of the interior Ballroom of Palazzo Barbaro, on the Grand Canal in Venice (photo left). It is where Sargent stayed with the Curtises' (Ralph Curtis and his parents) when he was there. 
 
 

The younger man on the left in the background is Ralph Curtis, the younger woman with him is his newlywed wife. John painted her again that same year (thumbnail right). The older couple is Ralph's parents. Mrs. Curtis had been painted by Sargent in his first visit to the Barbaro in 1882. When John gave Mrs. Curtis this family portrait as a gift of his appreciation, she hated it, and thought it most unflattering --  making her look years older than she felt (an accusation that wasn't true by accounts from others). She also found John's depiction of her son, in the manner in which he stood -- half leaning -- half sitting on the table -- to be most disrespectful of a gentleman of his standing in the company of his elders, and she outright refused the painting.

Mrs. Ralph Curtis  1898    Portrait of Mrs. Daniel Sargent Curtis  1882

John, as well as his friend Ralph (who was himself a painter) must have found this somewhat amusing, since the way in he painted the people was impressionistic and modern at the time. It clearly departed from his more traditional handling of his first portrait of her. Sargent love the painting, and he felt so highly of it that he withdrew his diploma painting Professor Johannes Wolff (thumbnail) which he submitted the previous year at the Royal Academy and submits this one in its place. 

Notes:

Exhibitions

Gondola Days: Isabella Stewart Gardner and the Palazzo Barbaro Circle, 2004

Sargent and Italy, 2002-2003
 

• See the Royal Academy of Arts
• See Overview of Venice
• See the year in review  1898