One possible reason that WWE booked Bayley to be beat by Alexa Bliss for the women’s title in her hometown of San Jose is because Vince McMahon believes that either you beat or you humiliate people when they are hometown favorites as it ends up getting great heel heat for their opponent.
Similar cases were when Charlotte Flair beat Sasha Banks in her hometown Boston on 10/30 and then Sasha returned the favor, beating Flair on 11/28 in Charlotte.
Source: Wrestling Observer Newsletter