I have an online reservation booking system (php script) that uses a mySQL database. Part of the script is a back end admin panel for offline reservations.
Is it possible to run a service like XAMPP using local host to access the remote database.
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Yes it is. Just the way you connect your local database, you can connect to a remote database with valid credentials. Then only thing changes is the hostname parameter.
for an example if your database is hosted on dreamhost, they have hostnames like..mysql.yourdomain.com. Create a database on your remote server and connect to it as