One of people’s favorite hobbies is to listen to music.

Question

is there another word to say for people. it sounds too informal for an essay.

Many people have a hobby of listening to music.
The favorite hobby of many people is to listen to music.
Listening to music is the favorite hobby of many people.
[I think the culprit in your sentence is the plural form of people. Thus, I simple restated the sentence but used the singular form of the word. You could substitute "teenagers" or "20-year olds" or some other category if you are referring to a particular set of people.]