Dementia-related healthcare planning requires accurate information on dementia patient characteristics and hospitalization trends at a population level. This population-based retrospective cohort study was designed to evaluate factors associated with total hospital length-of-stay (tLOS) in the last year of life (1990–2005) in Western Australians with dementia. Using linked hospital and death records, 29,884 dementia cases were identified. The average tLOS in the last year of life for all cases was 31.8 days. tLOS was longer for vascular dementia than Alzheimer's disease (41 versus 28 days; Rate Ratio (RR) 1.4; 95% CI 1.3–1.6). After multivariate adjustment, tLOS was longer for males than females (RR 1.4; 95% CI 1.3–1.4); longer for remote (RR 1.7; 95% CI 1.4–2.0) and very remote (RR 3.0; 95% CI 2.4–3.9) compared to metropolitan areas; and shorter with increasing age. 62% of admissions were emergency admissions. "Problems accessing alternative medical facilities" and "problems related to care provider dependency" accounted for a total of 16.4% of all bed days. In conclusion, people with dementia spend a considerable period of time in the hospital during their last year of life. Consideration of geographic isolation and accessibility to non-hospital facilities in dementia-related healthcare planning may liberate in-patient beds for more elective and acute care admissions.