The problem with it, compared to other harmful conditions – it doesn’t go away without a spell. Most effects that cause stun or paralyze (or most other harmful conditions) have a very limited time (like ‘until next turn’) or allow a save every round and often have options like ‘when you’ve saved – you are immune’.
And even three levels of exhaustion can put party in quite a serious disadvantage in combat.
1st level – gives them disadvantage on ability checks – which may be not that often used in combat, but still sometimes called for – casters use it to counter higher-level spells, for example.
2nd level – halves movement – which means that with some smart maneuvering – melee fighters are out of combat as enemies would always outrun them (if battlefield allows for it, of course). And fragile casters would have troubles escaping from harm.
3rd level – disadavantage on attack rolls and saving throws – affects all the party, so only caster with save-based spells are more or less unaffected.
And there is no way to remove such condition, except for burning a spell slot or healing ability. So, as an ability that monster(s) can spam every turn – it feels a bit overpowered. It may work as an ability that monster can fire once or twice per combat – though still feels quite powerful (assuming that there is more than one monster of such kind).