What Causes Soreness On Skin After Bug Bite?

Hi my 4 year old just came home from a vacation in Palm Springs and her dad said she had a bug bite on her leg; however, it is the most unsual looking bug bite i've seen. There is a definite entry point that looks like an open sore but her skin around the bite is also bubbling like a burn from a stove or something. She says it itches alot, I've been alternating Gold Bond Cream and 1% Hydrocortisone and it doesn't seem to be helping anything. Do you know what may have caused this and how I can proceed. Once again, 4 yr old and she is only 31 lbs.