Yeah that's a really good point for people who really want sequels (secretly me) because if you were Alola's first ever champion, why are you back clueless at your house? Like the only new thing you got is like a tank top and a marsh hat. But maybe GameFreak will pull of a typical sequel plot line and appears that's a totally different character that's coincidentally looks the same as the first champion. Although if this were to happen then there should be a second champion already since battling a doppelgänger of yourself isn't fun. Also maybe the new characters' parents rented the same house that the champion lived in??? Idek man, but knowing GameFreak is going to be totally uncalled for.
Honestly the best scenario would be the one I described above, Kukui having the Gyms opened and asking the player to start from scratch. Maybe include a Memory Link system at the very start of the game which you can link to your Sun or Moon version (sort of like what they did with Mass Effect/Dragon Age except not as major).
That all said, reading this reminded me of how other games took away a character's power-ups and I couldn't help but imagine them applying that to the player character to explain how the lost all their Pokemon:
Metroid Series: Oh no! The player was slammed so hard against a wall they lost all their Pokemon!
Me: Wait, what? Like I dropped their Poke Balls? Can't I go pick them up? And what about the Pokemon in my PC?
Metroid Series: Self-destruct sequence initiated.
Me: OH SHI-!
Kingdom Hearts 2: Hmm, looks like you've slept too long. You lost all the Pokemon you've acquired during your last journey.
Me: How does that make a lick of sense...
Mega Man Series: We've put the Pokemon you got in a Pokemon museum.
Me: Why would we do that? Can't I go get them? Also isn't that exactly what Lusamine was doing, how is this not hypocritical?
God of War Series: And so the Champion was defeated and sent to Giratina, where their Pokemon were ripped right off of them.
Me: ... I can guarantee you that didn't happen...