Probably doesn't, but I wonder if vSphere does something 'clever' and prevents ESXi NTP settings from using a VM based time source inside the hosting environment.
Its the sort of thing I would do, because of the way the VM boot up sequence works.
When a VM starts up, because it doesn't have a proper BIOS and battery backed CMOS realtime clock like a real PC, the virtual BIOS system time is set by synchronising with the host as it boots.
If the VM is then to provide the host with time, I can see an odd circular loop existing here, which doesn't seem like a good thing to me.