If you own a home and occupy it yourself, I can tell you that there are few things short of a locust plague or an ebola outbreak that will diminish the value of your home faster than having transient residents living around you. This is why it's in your best interest to have your municipal government enforce zoning laws that restrict property uses in low-density residential neighborhoods, for example.
That is exactly right and that’s why many HOA rules prohibit short term rentals.
But is it the Gov’t right to say if you can rent out your property for a short term rental? This has nothing to do with protecting property values, but in protecting hotel owners and collecting taxes.