The sites are chosen similar to the Super Bowl rotation. There has to be a bid. I don’t believe local interest was expected to be a big driver for ticket sales.
True! But it should, who wants to be in the Bay area right now? If you want good attendance you need to be someplace warm, or at least covered. As a local I'm sure you've heard the bad reports of the field there too.
In fact, local interest is considered a BAD thing when choosing bowl sites for the major championship-stream games.
I used to work for the LSU athletic department in the pre-Saban era, and we got to deal with this issue almost every year, because of the presence of the Superdome in New Orleans. Every year the Sugar Bowl committee is pressured to NOT invite LSU, because NOLA tourism officials strongly prefer that the SEC team in the bowl be from as far as possible from NOLA, so that they 1) Fly in, 2) Use taxicabs, 3) eat at least 6 restaurant meals, 4) drink a lot of wine and spirits, and 5) stay at least 3 nights in a hotel, thereby generating tax revenue on 6 fronts (including the game tickets). The Sugar Bowl committee's favorite game matchups were always Notre Dame vs. either Georgia, Vanderbilt, or Florida, because all of those teams have large fan bases in major cities with good air service, and with the exception of Florida, tend to be places where people with money are starved for good fresh seafood, and bonus points for a fairly high likelihood of their being Catholic or Episcopalian.. (FWIW, Alabama and Auburn are unpopular with all factions of New Orleans tourism leadership except the NOPD, because so many of those fans do not drink alcohol. It's the same with Miss State and Ole Miss, and I suspect that they would collectively open a vein before ever extending a bowl invitation to any team from Utah, no matter how good they were. The ideal fan from their POV is wealthy, middle-aged, sedentary, and fond of good food, fine wines and expensive bourbon. Liquor tax revenue is important in New Orleans.)
When game attendees are local or almost-local (within a 3-hour drive) the airport taxes are lost, the hotel nights are almost lost, the restaurant meals normally go down to no more than 3, and there is no taxicab revenue. Money made on tickets to the game itself are almost an afterthought, really -- it's the opportunity to make money on the REST of the trip that has the host cities salivating.
The short-notice planning issue is considered to not matter much; the idea is that a fan of good football will attend no matter who is playing, because going to a high-level game will be satisfying, but that the trip to a fun destination will drive the decision.