After you upgrade ESXi hosts, you can upgrade the virtual machines on the host to take advantage of new features.
VMware offers the following tools for upgrading virtual machines:
vSphere Web Client
Requires you to perform the virtual machine upgrade one step at a time, but does not require vSphere Update Manager. See the information about upgrading virtual machines in the vSphere Virtual Machine Administration documentation.
vSphere Update Manager
Automates the process of upgrading and patching virtual machines, thereby ensuring that the steps occur in the correct order. You can use Update Manager to directly upgrade the virtual machine hardware version and VMware Tools. See the Installing and Administering VMware vSphere Update Manager documentation.