I got this to load both the websites, however I am unable to log into both wordpress websites.

backend websiteone 
 .host = "127.0.0.1";
 .port = "7070";

backend websitetwo 
 .host = "127.0.0.1";
 .port = "2082";

 sub vcl_recv 
 if (req.http.host ~ "^(.*.)?websiteone.com$") 
 set req.backend_hint = websiteone;
 return (hash);

 if (req.http.host ~ "^(.*.)?websitetwo.com$") 
 set req.backend_hint = websitetwo;
 return (hash);
 

Here is what I did to resolve this issue:

mkdir /etc/varnish/sites-enabled

cd /etc/varnish/sites-enabled

nano siteone.com.vcl

sub vcl_recv 
 if (req.http.host == "siteone.com") addons

nano sitetwo.com.vcl

backend sitetwo 
 .host = "127.0.0.1";
 .port = "2082";


sub vcl_recv 
 if (req.http.host == "sitetwo.com") 
 set req.backend_hint = sitetwo;
 

Then I had to edit /etc/varnish/default.vcl

cd /etc/varnish/

nano default.vcl

The backend is configured for sitetwo as you can see above, but the backend for siteone is configured in default.vcl so I changed

backend default 
 .host = "127.0.0.1";
 .port = "7070";

And added these two lines to the bottom of default.vcl

 include "sites-enabled/siteone.com.vcl";
 include "sites-enabled/sitetwo.com.vcl";

Everything seems to be working correctly now! And if I have to add any more sites all I have to do is create sitetree.com.vcl in /sites-enabled folder and paste

backend sitethree 
 .host = "127.0.0.1";
 .port = "port number";


sub vcl_recv 
 if (req.http.host == "sitethree.com") 
 set req.backend_hint = sitethree;
 

Note: Siteone is running an ecommerce site so if you are not running a store then you should just be able to use the following in siteone.com.vcl

sub vcl_recv 
 if (req.http.host == "siteone.com") 
 set req.backend_hint = siteone;