In general, techniques are described for enhancing operations of virtual networks. In some examples, a network system includes a plurality of servers interconnected by a switch fabric comprising a plurality of switches interconnected to form a physical network. Each of the servers comprises an operating environment executing one or more virtual machines in communication via one or more virtual networks. The servers comprise a set of virtual routers configured to extend the virtual networks to the operating environments of the virtual machines. A virtual router of the set of virtual routers is configured to aggregate a plurality of inbound tunnel packets according to a same virtual network identifier in order to generate an aggregate tunnel packet. The virtual router is further configured to route the aggregate tunnel packet to a host associated with a virtual network identified by the same virtual network identifier.