When you buy a home, you're mostly paying for location, barring outliers like huge mansions. But that's not just the physical geography. On the whole, homeowners take better care of their properties than tenants do. They also have an incentive to be better neighbours than short-term tenants.
So, by introducing short-term tenants into an area, you are adding risk and loss of stability to the other homeowners. Go to an area that has a lot of rooming houses. It's not as nice as a purely residential area. That will eventually be reflected in resale values. So, the slumlord is externalizing the downsides and draining equity from the neighbours.
That's not always true: hotels are often much fancier than people's houses, and more visually appealing than the non-hotel buildings near them. Otherwise they don't get repeat guests.
I think it depends a lot on the clientele you're targeting. Rooming houses are generally for transient students or the down and out; they're looking for cheap lodging. Do they drive property values down? Or do they just tend to move to areas where property values are low? Probably some of both, but I don't think that's different than the rest of the dynamic of a neighborhood that's declining.
So, by introducing short-term tenants into an area, you are adding risk and loss of stability to the other homeowners. Go to an area that has a lot of rooming houses. It's not as nice as a purely residential area. That will eventually be reflected in resale values. So, the slumlord is externalizing the downsides and draining equity from the neighbours.