Dynamically modifying the resources of a virtual server

A system and a method dynamically adjusts the quality of service guarantees for virtual servers based upon the resource demands experienced by the virtual servers. Virtual server resource denials are monitored to determine if a virtual server is overloaded based upon the resource denials. Virtual server resources are modified dynamically to respond to the changing resource requirements of each virtual server. Occasionally, a physical host housing a virtual server may not have additional resources to allocate to a virtual server requiring increased resources. In this instance, a virtual server hosted by the overloaded physical host is transferred to another physical host with sufficient resources.